Drosophila Wingless (Wg) encodes a secreted protein of the Wnt family and acts both short-range inducer and long-range morphogen in many developmental processes. The extracellular Wg protein has been shown to activate its signaling cascade by binding to the seven-pass transmembrane receptors of the Frizzled (Fz) family. Although intracellular events trigged by Wg proteins have been extensively characterized in past several years, it is poorly understood how Wg protein travels from the cells of its synthesis to form morphogen gradient through a field of cells and how Wg protein forms active complex with its receptors to activate its signaling cascade. Recently, genetic analyses in Drosophila demonstrated that Wg signaling and Wg protein distributions are modulated by heparan sulfate proteoglycan (HSPG), a family of cell surface macromolecules that are composed of a protein core attached to Glycosaminoglycan (GAG) chains. Mutations in enzymes that generate or modify the GAG chains, exhibit phenotypes reminiscent of loss of Wingless (Wg) and lead to a loss of extracellular Wg proteins. Preliminary results also demonstrate that Drosophila glypican type of HSPGs are involved in Wg signaling. Our hypothesis is that HSPGs play specific roles in Wg ligand/receptor interactions as well as its distribution through field of cells. To gain insights into the function and specificity of HSPG in Wg signaling and morphogen gradient formation, we propose to further analyze the roles of both protein cores encoded by Drosophila Glypicans (Dly and Dally) and the specific enzymes involved in biosynthesis of the HS GAG chains. Altogether, our genetic and biochemical analyses of HSPGs will elucidate the role of HSPGs in regulating morphogen gradient formation and signaling of Wg proteins that play major roles in both developmental processes and oncogenesis.